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Some assumptions for using BSOP are that frictionless market,constant interest rate, no dividend and normally prices… Furthermore, it is indicative than definitive value.
Is it hard to know when apply this method or find out the current price and exercise price?
Thanks & warm regards,
I don’t understand your question, for two reasons.
Firstly, it is always clear from the exam question when Black Scholes is needed to be applied.
Secondly, in order to use the Black Scholes formula we need the current price and the exercise price.(PS If you want me to answer a question then in future you must ask in the Ask the Tutor Forum. This forum is for students to help each other.)
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